Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

Thank you for the question. Given how profitable the banks remain, families have every right to expect them to pass on any fall in funding costs as quickly as they passed on the 10th consecutive rate rises we saw under the Liberal government. It is that simple. When banks’ funding costs come down, their interest rates should come down and there fees should also come down. As the RBA’s Financial stability review highlights, difficulties in global financial markets are constraining liquidity, which is impacting on competition in the banking sector.

In times of international volatility and uncertainty, everyone in the community has an interest in ensuring that we have a well-run, stable, viable banking sector. I am aware, for example, that in terms of new home loans, the big four banks have moved from approximately 80 per cent provision to approximately 90 per cent in the last six months. That is as a consequence of the decline of securitisation—its almost disappearance—and the gradual contraction and disappearance of non-bank, non-credit union, non-building lenders. So the banks’ competitive position has strengthened as a consequence of the US subprime crisis.

The government also believes the community will reward those banks that offer the best deal to their customers. There have been 10 consecutive rate rises, as I said, courtesy of the former Liberal government, plus unofficial rate rises by the banks that have put a lot of pressure on families, particularly in respect of mortgages, so it is vital we have as much competitive pressure on the banks as possible. This government, but the Treasurer in particular, in conjunction with the Assistant Treasurer, Mr Bowen, have been doing a great deal of work in respect of putting competitive pressure on banks. It is important to exert competitive pressure on the banks. Our bank-switching package is an example of this. It is important to ensure that individuals have the ability to—